at_risk_and_passive_loss_limits

at_risk_and_passive_loss_limits - December 31, 2009 Assets...

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Topic: The interaction of the at-risk limitation & the passive loss limitations Mr. Able and Telax Corporation are the two equal members in Abrax LLC. At the beginning of 2009, Abrax had the following balance sheet. January 1, 2009 Assets 200,000 Accounts payable 170,000 Nonrecourse mortgage 20,000 Capital: Mr. Able 5,000 Capital: Telax Inc. 5,000 Liabilities & equity 200,000 Both Mr. Able and Telax Corporation had $100,000 outside basis in their LLC interests. The outside basis included each member’s $95,000 share of Abrax’s liabilities. Abrax’s accounts payable are nonrecourse because no member bears the economic loss for any LLC liability. Abrax’s nonrecourse mortgage, which is secured by real property and held by a state bank, is “qualified nonrecourse financing”. Abrax’s operating loss for 2009 was $42,000, which was allocated equally between the two members in accordance with their economic arrangement. As a result, the two members had a deficit balance in their capital accounts at year-end.
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Unformatted text preview: December 31, 2009 Assets 175,000 Accounts payable 189,000 Nonrecourse mortgage 18,000 Capital: Mr. Able (16,000) Capital: Telax Inc. (16,000) Liabilities & equity 175,000 Both Mr. Able and Telex received a Schedule K-1 reporting their $21,000 distributive share of the ordinary business loss. Mr. Able does not materially participate in Abraxs business and has only $1,800 of passive income from another passive activity. In 2010, Mr. Able is allocated $10,000 ordinary business income, Abrax makes no cash distributions, and there is no change in the amount of the LLCs qualified nonrecourse financing. In 2010, Mr. Able has $2,500 of income from another passive activity. Required: [1] What amount does Mr. Able report on his 2009 tax return? [2] What amount does Telax Corporation report on their 2009 tax return? [3] What amount does Mr. Able report on his 2010 tax return? [4] What amount does Telax Corporation report on their 2010 tax return?...
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